EDITORIAL: The case of the disappearing billions

The Chinese Nationalist Party’s (KMT) finances have been the subject of controversy and debate for more than two decades. A lawsuit filed on Wednesday by an unlikely plaintiff — a longtime party member — may finally succeed in providing a long overdue assessment of the party’s account books.

The debate over the KMT’s finances is hardly surprising, given that it arrived in Taiwan as a refugee — albeit a conquering one — and by the mid-1990s was judged to be one of the richest political parties in the world. The KMT prospered as dramatically as the nation during the hardscrabble one-party-state years that created Taiwan’s economic miracle.

Many of the KMT members who rotated between government and party posts or served concurrently were praised for their economic and financial acumen, with The Economist noting in a 1998 article that at one point in the late 1970s, the central bank governor was also the KMT’s top finance manager. The party consistently trumpeted its economic prowess on the campaign trail, including during President Ma Ying-jeou’s (馬英九) first presidential bid and his re-election effort in 2012.

However, the party’s vast treasure chest and its campaign largesse have also created new problems. While the term “black gold” is commonly used to describe oil, by the 1990s in Taiwan it was shorthand for the KMT and political corruption.

Even as KMT lawmakers were able to thwart legislative efforts to force the party to account for and divest itself of “stolen” assets or to enact an effective sunshine law — including through the eight years of opposition rule — the nation’s economy began to stall and the party began to hemorrhage money. The KMT’s economic astuteness appeared to be failing.

By November 2004, the KMT made headlines with its inability to pay its full-time employees on time, while the Bank of Taiwan was pressing it to pay more than NT$300 million (US$9.4 million at current exchange rates) outstanding for months of preferential interest rates the bank had paid to retired KMT workers.

When Ma first ran for the KMT chairmanship in 2005, he promised to clean up the party and resolve the stolen asset controversy. He made the same promise when he ran again in 2009. Yet the party’s actions under his watch only created more controversy.

On Dec. 31 last year, KMT Deputy Secretary-

General Lin Te-jui (林德瑞) told the party’s Central Standing Committee that the KMT had about NT$1 billion in land and buildings and NT$23.23 billion worth of enterprises, but its assets had plunged from NT$62.8 billion in 2000 to NT$23.3 billion in 2006 as a result of investment losses. He also said that businesses the party used to run had all been placed in trust and it had not run for-profit corporations since 2007. Vice President and acting KMT chairman Wu Den-yih (吳敦義) told the committee that none of the property the KMT holds had been obtained improperly.

Lin’s and Wu’s statements seemed to be the latest salvo in the party’s cover-your-hide efforts in the wake of the comment by New Taipei City Mayor Eric Chu (朱立倫) — the sole contender to be the next KMT boss — that the party “must return any ill-gotten assets to the nation.”

Attorney George Wang (王可富) this week demanded an accounting of the KMT’s financial failings from 13 top party officials and members — including Ma — whom he accused of breach of trust and embezzling NT$200 billion in party assets. He wants the Taipei District Prosecutors’ Office to find out how the party managed to lose NT$39.5 billion between 2000 and 2006.